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Proto Labs (NYSE: PRLB) released strong first-quarter 2018 results before the market open on Thursday. The technology-enabled, quick-turn, contract manufacturer of prototypes and low-volume production parts posted revenue and adjusted earnings per share (EPS) growth of 34% and 39%, respectively.
Management attributed the growth to generally robust business performance combined with a boost from the recent changes in the U.S. tax law and the contribution from RAPID Manufacturing, the New Hampshire-based metalworking company Proto Labs acquired on Dec. 1.
The market liked the results, sending shares of Proto Labs to a closing gain of 4.3% on Thursday.
Proto Labs' key quarterly numbers
| Revenue | $107.7 million | $80.2 million | 34.4% |
| GAAP operating income | $21.7 million | $17.7 million | 23% |
| GAAP net income | $18.1 million | $12.2 million | 48% |
| Adjusted net income | $19.2 million | $13.6 million | 41% |
| GAAP earnings per share (EPS) | $0.66 | $0.46 | 43% |
| Adjusted EPS | $0.71 | $0.51 | 39% |
Data source: Proto Labs. GAAP = generally accepted accounting principles.
Excluding the $2.7 million favorable impact of foreign currency and the contribution from RAPID, revenue grew somewhat less than 17% year over year. Management said RAPID generated revenue of about $11 million in the first quarter of 2017, but wasn't able to break out its sales in the reported quarter because there's been an intermingling of RAPID's CNC (computer numerical control) metal-machining operation with Proto Labs' existing CNC business.
Proto Labs had forecast adjusted earnings per share (EPS) in the range of $0.64 to $0.70 on revenue of $101 million to $106 million, so it beat the upper end of both of its guidance ranges. For additional context -- though long-term investors shouldn't give too much importance to Wall Street's near-term estimates -- analysts were looking for adjusted EPS of $0.68 on revenue of $103.9 million. So the company breezed by both expectations.
3D printers. Image source: Proto Labs.
Revenue results by service provided
| Injection molding (Protomold) | $51.3 million | 7% |
| CNC machining (Firstcut) | $36.7 million | 67% |
| 3D printing | $12.3 million | 22% |
| Sheet metal | $6.2 million | 100% |
| Other | $1.1 million | 470% |
| Total | $107.7 million | 34.4% |
Data source: Proto Labs.
Proto Labs's CNC business continues to drive growth, as it did in all four quarters last year. While this business benefited from the acquisition of RAPID in the previous quarter, the company's existing CNC business also performed well. Injection molding is performing better than suggested by the metric above. This business had a particularly tough year-ago comparable due to a couple large orders in Europe and the shipping of the final products from its now discontinued magnesium injection molding operation.